County to foreclose on developments over $20 million debt

Jan. 11, 2013

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Greene County has begun work to initiate foreclosure proceedings on two developments that were, over time, to have paid back more than $20 million to the county coffers.

The county will move quickly to foreclose on the properties to try to recoup its investment, County Administrator Tim Smith said. Officials learned this week that developers in the project had missed an end-of-2012 deadline for an annual payment due in the deal.

The county is ultimately on the hook to pay back $22 million in bonds split between the developments: Wilsonís Creek, under Larino Properties, and Jamestown, under American Equities of Missouri.

Both utilized Neighborhood Improvement District funding ó a mechanism by which the county signs for bonds and uses that money to reimburse developers for infrastructure costs like roads, stormwater requirements and other needs.

The bonds give the developer a starting point, which is often enticing for investors and lessors.

To pay the county back, property owners pay a higher personal property taxes over the span of 20 years. After that time, the bonds are entirely paid back and the county no longer has a connection to the property.

The county expected a total of $1.1 million in those special assessments to come in each year for 20 years so that the county could make bond payments.

While a few individual property owners have paid their taxes on time, Smith said, the developers, who own the majority of each of the properties, did not. A handful of homeowners have not paid those taxes, either.

Because the developers agreed to NID financing, Presiding Commissioner Jim Viebrock said, the county has the authority to foreclose on the property and sell it.

But foreclosure processes can take time, and the county has only a little more than $750,000 in its bond reserve fund to cover the $1.1 million payment on the bond this year.

The rest would have to come from the countyís already plagued general revenue fund.

If the process takes longer than a year, there will be no bond reserves left to cover the bill, meaning general revenue would have to absorb the cost each subsequent year.

Smith hopes, if the foreclosure process goes through, the properties could be sold as early as August.

Attempts to contact Paul Larino, the developer behind the Wilsonís Creek project, and American Equities were unsuccessful Friday.

The Wilsonís Creek project is in Battlefield. Larino is also the developer who was forced to fold on the Hickory Hills development in Springfield late last year. The Springfield school district had been working with Larino on that deal.

Jamestown is a mixed-use development with homes, retail space and a Rogersville school. Schools are tax-exempt and therefore not included in the tax issue.